RE:USA Inflation Reduction Act (IRA) 2022 Re: Biotech and China What Might Future Commercial Models Look Like?
The IRA may compel pharmaceutical companies to rethink their commercial models and review their portfolios, prioritizing therapeutic areas where unmet medical needs and the potential for innovation are highest.This could lead to a surge in personalized medicine, where treatments are tailored to individual patients and thereby offer more value to healthcare systems and justify premium costs, but may also shift focus from less-profitable treatments.
Furthermore, the industry might experience an acceleration in the use of real-world evidence and digital health technologies to demonstrate drug value beyond the traditional clinical trial environment. Such strategies could become integral in negotiations with Medicare and other payers to secure favorable pricing.
Where Will the Industry Go? Future Investment in Innovation
The ultimate impact of the IRA on drug innovation is still to be fully realized. However, it's plausible to expect that the industry will adapt by focusing more sharply on high-value, high-impact innovations. This could mean a shift toward more significant investments in biotechnology, gene therapies and treatments for diseases that are currently underserved by the market. However, as investments move to these treatments, the development of other drugs and medicines, such as small-molecule treatments for cancer, will inevitably receive less attention.
The IRA also potentially sets the stage for increased public-private partnerships, as both sectors seek to balance the dual mandates of making healthcare more affordable while ensuring the continuous flow of innovative treatments. These partnerships are not new in the biomedical space — such as venture capitalists investing in high-risk, high-reward R&D projects — and have been critical for making headway in challenging treatment areas. Such collaboration could be crucial in pooling resources for research and sharing the risks involved in developing novel therapies, even as drug prices and company revenues decrease.
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